Organization forms group to examine new annuity rules

Worried that new suitability rules for annuities will lead to conflicts between insurers and broker-dealers, an annuity advocacy organization has formed a working group of both parties to work out a solution.

The Insured Retirement Institute started the group in response to firms’ concerns over how carriers and broker-dealers will contend with the rollout of the National Association of Insurance Commissioners’ recently amended annuity suitability rules.

As part of the rules, adopted in March, insurers must ensure that representatives and advisers selling their annuities take a four-credit course on annuities, along with product-specific education. Broker-dealers fear that carriers will give them additional compliance burdens by requiring them to track which reps have received the extra training.

Both groups worry that states will make changes to the amendments individually, requiring broker-dealers and insurers to comply with and track multiple versions of the requirements. So far, only Wisconsin has adopted the new model as a statute.

The IRI working group, comprising 60 to 70 representatives from broker-dealers and insurance companies, first convened two weeks ago to try to hash out a uniform method of complying with the rules.

“The mechanics of product-specific training for 20 or more companies is worrisome and concerning for broker-dealers,” said Lee Covington, senior vice president and general counsel at the IRI. “People are concerned it’ll have an impact on consumer choice and competition in the marketplace.”

“Even slight variations [of the rule] can be cumbersome and inefficient for companies and broker-dealers,” he added. “We want to determine whether there’s commonality on what practices may be used out there.”

E-mail Darla Mercado at [email protected].